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TMI Blog2016 (12) TMI 800X X X X Extracts X X X X X X X X Extracts X X X X ..... the involvement of assessee in any purchase and sale of land through six registered sale deeds. In the absence of any evidence on record against assessee to act as middleman or conduit, ld. CIT (Appeals) was justified in deleting the addition. This ground of appeal of the revenue has no merit. Same is, accordingly, dismissed. - ITA Nos. 542 and 565/CHD/2015 - - - Dated:- 9-11-2016 - Bhavnesh Saini, Judicial Member And Annapurna Gupta, Accountant Member S.K. Mittal for the Appellant Ajay Jain and Yogesh Monga for the Respondent ORDER Per Bhavnesh Saini, JM Both the cross appeals are directed against the order of ld. CIT (Appeals) Panchkula dated 30.03.2015 for assessment year 2006-07. 2. We have heard ld. Representatives of both the parties, perused the findings of authorities below and considered the material on record. Ld. Representatives of both the parties submitted that the major issues have already been adjudicated by ITAT Chandigarh Bench in the connected matters of ITO vs. Shri Bimal Suri and ACIT vs. Shri Shekhar Chawla in ITA Nos. 664/2011 and 680/2011 of assessment year 2006-07 vide order dated 20.09.2016, copy of the same is filed on record. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .04.2005 v) Agreement to Sell dated 29.06.2005 7. On perusal of these documents, it was found that assessee was in some or other way related to various papers found during the course of survey. The Assessing Officer made the above additions on the basis of photo copies of the agreement found from the premises of M/s. Chandigarh Overseas Pvt. Ltd. and to its sister concerns. 8. During the course of assessment proceedings the Assessing Officer examined the documents. One of the impounded document is 'Agreement to Sell' dated 29.01.2005 executed between the sellers (i) Smt. Pushpinder Kaur (ii) Shri Gurtej Singh (iii) Preetpal Singh and the buyers; (i) Shri Gulshan Rai (ii) Shri Jagpal Singh (assessee) and (iii) Shri Bimal Suri. Other documents noted above were considered to determine profit earned on sale of lands. All issues are same in cases of assessees, Shri Bimal Suri and Shri Shekhar Chawla. 9. All the above ground Nos. 2, 4 and 5 are connected with the impounded documents found during the course of survey. Ld. Representatives of both of the parties submitted that facts and issues are identical as have been considered by ITAT Chandigarh Bench in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ell dated 29.1.2005. ii) Backside of page 2 of the agreement to sell dated 29.1.2005. iii) Registered sale deed for 8 kanal 10 marlas. iv) Agreement to sell dated 19.4.2005. v) Agreement to sell dated 29.6.2005. 5. The ground No. 1 raised by the Revenue is general and needs no adjudication. 6. On ground No. 2, the Assessing Officer made addition of ₹ 1,12,04,166/-. 7. During the course of assessment proceedings the Assessing Officer observed that one of the impounded document is an agreement to sell dated 29.1.2005 executed between THE SELLERS 1. Smt. Pushpinder Kaur, W/o. Sh. Didar Singh. 2. Shri Gurtej Singh, S/o Shri Didar Singh. 3. Shri Pritipal Singh, S/o Shri Didar Singh, R/o 44, Ext. Guru Teg Bahadur Nagar, Jalandhar. And THE BUYERS 1. Shri Gulshan Rai. 2. Shri Jagpal Singh. 3. Sh. Bimal Suri (the assessee). 8. As per this agreement, the seller had agreed to sell land 25 kanals 10 marlas situated at Village Lohgarh at the rate of ₹ 1,18,00,000/- per acre to the buyers. The assessee is the one of the buyer and total consideration comes to ₹ 3,76,12,500/-. The Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. The Assessing Officer has not examined any party to the agreement and no enquiry has been conducted. Further the assessee and other buyers have purchased only 8 Kanal and 3 Marlas out of total land measuring 25 Kanals and 10 Marlas and assessee is not aware about the balance land sold by Mrs. Pushpinder and others and consideration received by sellers. Further the Assessing Officer has not supplied the copies of returns of sellers. Further the assessee during the course of assessment proceedings has already explained that the assessee and other 2 persons, namely S/Shri Jagpal Singh and Bimal Suri had agreed to purchase 25 kanals 11 marlas Land for consideration of ₹ 1.20 crore and paid biana of ₹ 40 lacs and the assessee and other 2 persons could not arrange money and agreed to purchase only 1/3 share of land for consideration of ₹ 41.25 lakhs in order to save his original biana. The Assessing Officer is only relying on photocopies of forged documents, which were found from the premises of third party. 11. That the assessee had never executed any agreement to sell dated 29.1.2005 for purchase of 25 kanals 18 marlas @ ₹ 1.18 crores per acre fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce. The rest of area of land i.e. 2/3rd of the total land was not sold to assessee and the assessee is not aware of the facts to whom and at what rate the said rest of land was sold. The Assessing Officer mentioned that the sellers had filed their returns of Income with DCIT Jalandhar showing the sale consideration received by them at ₹ 3.76 crore. In this regard, this fact was never confronted to assessee during the course of assessment proceedings and moreover the assessee had purchased very small share in total land and was not aware about the rest of land sold by sellers and nowhere it is mentioned that the assessee has paid more amount than shown in registered sale deed. Further, the counsel argued that the presumption is only with regard to the person from whose possession and control the books of accounts and documents are found. Moreover, this presumption is rebuttable presumption. The presumption with respect of photocopy of documents found from the third parties premises could not be made against assessee. 12. The assessee along with two other persons had purchased land measuring 4 kanals 5 marlas for consideration of ₹ 21.25 lakhs through registered sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... original sellers directly and consideration paid by appellant and other buyers and simply recorded the statement of appellant during course of assessment proceedings. (d) The assessing officer relied on the return of income filed by the buyers and there were no details with respect to sale consideration received from original buyers and new buyers and during the course of appellate proceedings no such returns were produced. (e) The appellant and other buyers had not purchased the entire land as shown in agreement to sell dated 29-01-2005 and even in registered sale deed 1/3 share of total land was purchased by original buyers and other party and therefore it is clear that they had not acted upon the agreement to sell dated 29-01-2005. (f) The agreement relied upon by AO i.e. Document no 18 and 19 of Annexure B2 is not on stamp paper and signature of all parties to agreement are missing and moreover document no 33 of Annexure B1 (agreement) is on the stamp paper for sale of same land and no consideration was mentioned on this document. (g) The part of contents mentioned in page 33 of Annexure B1 has been copied on document No. 19 of Annexure B2 and therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onisers and Consultants Pvt. Ltd. at a rate of 2,54,00,000/- per acre and also noticed that it is mentioned in the agreement that an amount of ₹ 75.00 lacs had been paid as advance money by Parsav Colonisers, Director Shri Shekher Chawla, which includes ₹ 3.00 lacs by cheque No. 165251 of Andhra Bank and ₹ 72.00 lacs by cash. This is also mentioned that an amount of ₹ 25 lacs will be paid by 15.4.2005 and the date of registry had been fixed on 15.6.2005. 17. During the course of assessment proceedings, information was called under section 133(6) of the Act from Andhra Bank, Sector 34-A, Chandigarh branch. It was confirmed from the information received that the Ch. No. 165251 had been issued in favour of Smt. Pushpinder Kaur (seller) by debit to the account of M/s. Parsav Colonisers. It established beyond doubt that the agreement to sell in question was correct and the entire amount of consideration at ₹ 8,09,62,500/- proved. 18. Thus the sellers i.e. S/Shri Gulshan Rai Satija, Jagpal Singh and Bimal Suri have earned profit on sale of this land as below:- Sale consideration as per Agreement to sell @ ₹ 2,54,000 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between payment received and terms and condition of agreement relied by the Assessing Officer. The Assessing Officer relied upon photocopy of forged and bogus documents which do not relate to assessee and not executed by assessee and which were collected at the back of assessee from the premises of third parties not related to assessee. Further the Assessing Officer had not made any inquiry from original sellers, buyers and companies to know the truth. Further the Assessing Officer has not made any enquiry from parshav Coloniser consultants Private Limited to know the truth and purchase consideration paid if any to assessee and other alleged owners. The assessee has not sold any land to Parshav Colonisers Consultants Private Limited and, therefore, question of profit does not arise. 21. The learned CIT (Appeals), however, deleted the entire addition. His findings in para 11 of the order are reproduced as under:- 11 I have gone through the assessment order and submission made by appellant and it is clear that the AO has calculated the profit on the basis of photocopies of agreement to sell without ascertaining the fact whether the deal has matured or not. In the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal payment of ₹ 1.59 lacs will be made by party No. 3 as party payment within seven days from the date of execution of sale deed pertaining to land measuring 2500 square yards. The agreement dated 29.6.2005 with Gee City Consultant Pvt. Ld. extremely important and can be taken as true and one that was acted upon. Its authenticity is proved by the following facts:- This agreement contains reference to the original agreement to sell dated 29.01.2005 and its terms and conditions that the buyers S/Shri Gulshan Rai, Jagpal Singh and Bimal Suri can have the land registered in their own name or in any other name. This indeed was the intention of the buyers, the assessee being one of them, to further sell the land at profit without getting it registered in its own name. This was a common occurrence around the period when prices of real estate were escalating by the day in the areas around Zirakpur and there was a frantic growth of residential Commercial Estates in the area by Private Builders. It refers to the agreement dated 20.04.2005 with Parsav Colonisers. It has reference to the registered sale deed dated 17.06.2005 of 1/3rd share of 25 kanals 10 marlas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 28 and 29 of his order are reproduced as under:- 28. In view of above discussion and judgment given by Kerala High court reported at 128 Taxman 848. Amount stated in the sale deed cannot be ignored on the basis of agreement of sale unless it is proved that the agreement of sale was acted upon and the amount stated in the agreement was actually paid. On the basis of agreement to sell it cannot be concluded that the price mentioned in the sale deed is not correct and also placed reliance on judgment given by Madras High Court in case of CIT vs. P.V. Kalyana Sundaram, 282 ITR 259 (affirmed by Supreme Court) concluded that in absence of any independent enquiry, AO was not justified in making addition on account of profit on sale of land to M/s. Gee City Builders Private Limited. 29. In view of the above discussion, the plea on this ground is accepted, deleting the addition so made. 27. We have heard the learned representatives of both the parties. The learned D.R. referred to Paper Book filed by the Department in which copies of the agreements to sell in question have been filed. The learned D.R. submitted that even if these are copies of the original agreement to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee. There is no recovery of any incriminating document from the power and possession of the assessee. The Assessing Officer has not brought any material on record to prove any connection of the assessee with these documents/agreement to sell. The Assessing Officer wanted to rely upon the photocopies of the agreement to sell in question. Therefore, the onus would be upon the Assessing Officer to prove that the documents found during the course of survey from third party, belonged to the assessee. The original of the photocopies were never recovered in survey proceedings or in post survey proceedings. The documents found are only photocopies and no original documents were found. Therefore, photocopies of the documents would have little evidentiary value. It is also admitted fact that the survey party as well as Assessing Officer has not made any enquiry from any seller or buyer, M/s. Parsav Colonisers and Consultants Private Limited and M/s. Gee City Builders Private Limited with respect to sale/purchase of any land from the assessee or from any original sellers directly or indirectly. No material have been brought on record if the assessee was connected with any deal as alleged in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by order of ITAT Chandigarh Bench in the case of Shri Bimal Suri (supra). We find that issue and facts are identical in the case of the assessee as have been considered in the case of Shri Bimal Suri (supra) in which ld. CIT(A) deleted all these additions and Tribunal dismissed departmental appeal on same facts. Following the order in the case of Shri Bimal Suri (supra), we set aside the orders of authorities below and delete all the additions. Ground Nos. 2, 4 and 5 of appeal of the assessee are allowed. 11. On ground No. 3, assessee challenged the addition of ₹ 1,07,084/- on account of investment in registration of purchase deed. During the assessment proceedings, the Assessing Officer noted that 1/3rd share of the land was got registered on 17.06.2005 at ₹ 42,50,000/- by the three original buyers (1/2 share) and Shri Shekhar Chawla, Director, Parshav Colonisers (1/2 share). In addition to sale consideration, ₹ 3,82,500/- and ₹ 10,000/- were paid towards stamp duty and registration fees respectively by the buyers. The Assessing Officer computed assessee's 1/6th share in the investment (1/3rd of 1/2) as under:- i) Addl . Investm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee is allowed for statistical purposes. 15. On ground No. 6, assessee challenged the addition of ₹ 24,83,333/- on account of unexplained bank credits. The revenue on ground No. 2 challenged the order of ld. CIT (Appeals) in deleting the addition. During assessment proceedings, Assessing Officer noted that assessee Shri Jagpal Singh, Shri Gulshan Rai Satija and Shri Bimal Suri have joint bank account with Andhra Bank Sector 34, Chandigarh. The information about the account was called under section 133(6) of the Act and assessee was asked to explain the source of the cash deposited on various dates in the bank account, details of which are noted in the impugned order in a sum of ₹ 74,50,000/-. Since assessee did not furnish any explanation about the credits, therefore, same were considered as unexplained cash credits and 1/3rd share of the credit i.e. ₹ 24,83,333/- was added to the returned income of the assessee. 16. The assessee challenged the addition before ld. CIT (Appeals) and written submission of the assessee is reproduced in the impugned order in which the assessee explained that DCIT, Circle 6(1) accepted source of deposit in joint account in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r has mentioned in the remand report that assessee has not furnished any explanation on these credits at assessment stage which fact is also mentioned in the assessment order. The Assessing Officer in the remand report contended that these are additional evidences under Rule 46A of IT Rules. The ld. CIT (Appeals), instead of deciding the issue on merit, deleted the addition because Assessing Officer has made addition on account of profit earned by assessee and given telescoping benefit of addition of ₹ 1.44 Cr on which we have deleted the addition on ground No. 4 following the order of ITAT Chandigarh in the case of Shri Bimal Suri (supra). The revenue has contended that such a benefit should not be given to the assessee but it is a fact that once addition have been deleted of the profit earned by assessee on account of agreement to sell, then this ground shall have to be decided and adjudicated upon on merits and no such benefit could be extended to the assessee for deleting the addition for statistical purposes. We find that assessee has prima-facie case for deletion of the addition because the assessee had made specific submission before ld. CIT (Appeals) that addition is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le deed were lower as reflected in the chart noted in the assessment order but the Assessing Officer computed the sale value by applying rate of ₹ 3.65 Cr per acre. Accordingly, the profit in each transaction being difference of computed value and the value as per sale deed was calculated. The Assessing Officer as per tripartite agreement, computed assessee's share as 1/5th and thus, made addition of ₹ 32,91,383/- as assessee's share on account of profit generated on arrangement of additional land. 22. The assessee challenged the addition before ld. CIT (Appeals) and written submission of the assessee is reproduced in the impugned order in which the assessee briefly submitted that Assessing Officer has relied upon tripartite agreement which the assessee has never executed. Further, even if photo copy found from the premises of third party, though not admitted, the signature of the assessee is missing. It was submitted that Assessing Officer in the case of Shri Bimal Suri did not make the similar addition. It was also submitted that Assessing Officer made this addition on the basis of agreement which was never executed by the assessee. The assessee explained p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no evidence that the appellant was involved in such deals either through any document as agreement to sell or any other evidence showing that the appellant and other and Parshav Colonisers made any purchase of these properties as additional land and sold to Gee City Builders. The AO has also not conducted any further enquiry to find out any involvement of the appellant in the purchase and sale of the additional land through 6 registered sale deeds. In the absence of such evidence or any further inquiry, the AO was not justified in making the share of the appellant as notional profit in arrangement of additional land of 2500 sq. yds. Although, the AO has noted name of Sh. Gulshan Rai Satija acting as: middle man in four transactions and purchase and sale of land in one transaction; with Sh. Ishar Singh Nagpal to Gee City Builders but the AO has not found the name of appellant in any of six properties purchased and sold to Gee City Builders either as purchaser or seller or as middle man. Therefore, in the absence of any evidence regarding earning profit or commission on such arrangement of additional land of 2500 sq. yds. to Gee City Builders, the A.O. was not justified in calcula ..... X X X X Extracts X X X X X X X X Extracts X X X X
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